National Amusements Hikes Offer to Buy Viacom

NEW YORK — A movie theater chain seeking to wrest Viacom International from a management-led buyout group has sweetened its offer for the cable and entertainment firm, increasing pressure on the management group to improve its 4-month-old bid.

Some analysts valued the latest offer by the Arsenal Holdings unit of National Amusements Inc. at $51 a share, compared to what they said was an earlier Arsenal Holdings offer of $49.25 a share and a $47-a-share offer from the management-led group. Arsenal Holdings' offer was made Sunday to a special committee of Viacom directors, who disclosed it without comment Monday.

The development was the latest in a bitter takeover contest that has raged since last fall over what analysts have considered some of the most valuable properties in the entertainment industry. Viacom owns Showtime-the Movie Channel, MTV Networks, five television and eight radio stations and a huge library of such classic programs as "I Love Lucy" and "All in the Family."

"Clearly, this is the higher bid," said one analyst, Dennis McAlpine of Oppenheimer & Co. in New York. "The board's going to have a hard time throwing this one out."

The Arsenal Holdings offer increases the cash portion to $40.50 a share from an earlier $37.50 a share. To counter criticism that the National Amusements offer is inferior because it would take an additional six months to complete, the firm offered to pay interest if the deal is not completed by April 30. Interest would take the form of dividends on the preferred stock, and cash at an 8% rate on the cash portion of the bid. It would continue to accrue until the deal was completed.

"I think we've diffused the time issue with this," said Sumner M. Redstone, National Amusements chairman. "I'd be shocked if they don't accept the offer."

Both offers would give shareholders a 20% stake in a company that would be set up to acquire Viacom. National Amusements' offer expires at noon Wednesday, adding to the pressure on the Viacom board.

Viacom's stock rose sharply in response to the news, gaining $1.875 a share to $47.325. "The stock price says it all," said John Tinker, analyst with Bear, Stearns & Co. in New York. "It's a confident market."

Tinker said he had changed his earlier opinion that Redstone did not want control of Viacom but was simply trying to force Viacom to offer him a premium for him to drop his takeover effort. "This is a for-real offer," Tinker said.